1.1.3 - Market Positioning

Question 1

What is the purpose of a market map?

Answer 1

A market map illustrates the range of ‘positions’ that a product can take in a market based on two dimensions that are important to customers. It can be used to spot a gap in the market.

Question 2

What are the advantages of market maps?

Answer 2

1. helps spot gaps in the market
2. useful for analysing competitors
3. encourages the use of market research

Question 3

What are the disadvantages of market maps?

Answer 3

1. just because there is a gap it doesn’t mean there is demand
2. not a guarantee of success
3. how reliable is the market research?

Question 4

What does effective differentiation allow a business to do?

Answer 4

1. compete effectively
2. protect and build a brand
3. add more value

Question 5

How does effective differentiation allows a business to compete competitively?

Answer 5

Product differentiation is a source of competitive advantage, provides it can be sustained.

Question 6

How does effective differentiation allow a business to protect and build a brand?

Answer 6

1. build intangible value
2. strengthen customer loyalty

Question 7

How does effective differentiation allows a business to add more value?

Answer 7

strong differentiation should allows businesses to charge a higher price leading to higher profit margins.

Question 8

What are the key requirements for effective product differentiation?

Answer 8

1. capable of delivering what is important to customers.
2. distinctive - compared with competitors
3. communicated and visible to customers.
4. not easily copied by competitors.
5. affordable for the target customers.
6. profitable

Question 9

What is added value?

Answer 9

Added value is the difference between the price customers are willing to pay, and the costs of the inputs required to create the product of service.

Question 10

What is the transportation process?

Answer 10

Inputs —> Transformation process (adding value) —> Outputs

Question 11

What is competitive advantage?

Answer 11

A feature of a business and/or its products that enable it to complete effectively with rival producers/products.

Question 12

What is the market positioning?

Answer 12

An effort to influence consumer perception of a brand or product, relative to the perception of competing brands or products.